MONTPELIER, Vt. (Legal Newsline) — The U.S. Department of Labor (DOL) announced a lawsuit Jan. 5 against First Bankers Trust Services Inc. and Sonnax Industries Inc. and its owners for alleged violations of the Employee Retirement Income Security Act.
“The department alleges the defendants breached their fiduciary responsibilities to act solely in the
interest of the plan and its participants with care, skill, prudence and
diligence, and solely in accordance with the plan’s documents as required by law,” said Susan Hensley, the department's regional director in Boston.
“Instead, they placed their own interest above those of
the plan’s participants who put their trust in the plan, its trustee and other
According to the DOL, Sonnax
and officers Tommy Harmon, CEO, and Frederick Fritz, a board member, hired
First Bankers in 2010 as an independent fiduciary to advise Sonnax’s ESOP. An ESOP is a
retirement plan in which some or all assets are invested in employer stock.
benefits for ESOP participants depend on the ESOP buying and selling stock for
fair market value. On Jan. 3, 2011, the company purchased all of Harmon’s and Fritz’s stock shares and issued
new shares sold to the ESOP. The Labor Department alleges the calculations used to make this decision
“The alleged actions taken by
the defendants improperly disadvantaged the ESOP and its participants,” said Michael Felsen, the
department’s regional solicitor in New England. “We’ve filed this suit so that the losses are restored
to the plan and other corrective action will be taken for the benefit of the